2021 (5) TMI 901
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.... him, disallowed an amount of Rs. 3,91,936/- u/s 40A(3) out of car repairs and maintenance and determined the total loss of the assessee at Rs. 94,25,270/- as against the returned loss of Rs. 98,17,203/-. 3. Subsequently, the ld.PCIT called for the records and examined the same and noted that no revenue from operations has been shown by the assessee during the relevant financial year and the assessee has only shown 'Other income' of Rs. 4,50,030/- which consists of exempted agricultural income of Rs. 2 lakh and 'Other income' of Rs. 2,00,030/-. However, the assessee has claimed depreciation of Rs. 71,11,250/-, finance cost of Rs. 14,92,076/- and 'Other expenses' of Rs. 17,32,848/-. Further, the 'Other expenses' of Rs. 17,42,000/- includes Rs. 7,91,514/- towards vehicle running and maintenance expenses. He further noted that the assessee has received unsecured loan from the Director Shri Vinod Kumar of Rs. 15,40,80,000/- and has also given inter-corporate loans/advances to sister concerns. He further noted that the AO has not examined the application of the provisions of section 2(22)(e) of the Act in the context. He, therefore, issued a show cause notice to the assessee u/s 263 of....
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....he Act and has gone by extraneous, irrelevant and incorrect facts and contrary to the material placed on record during proceedings u/s 143(3) and section 263 of the Act. The action of the Ld. Pr. CIT is wholly unreasonable, uncalled for and bad in law. 7. The Appellant craves leave to add, amend, alter vary and / or withdraw any or all the above grounds of appeal. 8. The appellant prays that the Order passed by the learned Pr. CIT u/s 263 of the Income tax Act, 1961 may be ordered as illegal, invalid and void abinitio." 6. The assessee has also filed the following additional grounds:- "1. On the facts and circumstances of the case the Assessment Order passed under section 143(3) and further revised by the CIT under section 263 of the Act is void, as the impugned year is the year of search and the AO ought to have framed the assessment under section 153B (1) (b)/143(3), which provisions are exclusively applicable for framing the assessment of the year of search. 2. On the facts and under the circumstances of the case, the jurisdiction assumed by the CIT u/s 263 against the order of the AO dated 30.08.2016, passed under section 143(3) is void ab initio as no notice of sectio....
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....l ground and prays that the same should be admitted in the interest of justice. He accordingly submitted that the delay in raising the additional grounds should be condoned and the same should be admitted for adjudication. 8.1 After hearing the ld. DR and considering the argument of the assessee for admission of the additional grounds, we admit the same for adjudication. 9. The ld. Counsel for the assessee submitted that the assessee is a private limited company incorporated on 15.12.2006 and is engaged in real-estate business. A search and seizure action was conducted by the department on Krrish Group on 9.11.2011. Accordingly the revenue has reopened the assessment of assessee for AYs 2006-07 to 2012-13 which is evident from the copy of satisfaction note placed at Page No-2 of the Paper Book. The ld. Counsel for the assessee drew the attention of the Bench to following dates which according to him go to the root of the matter: - DATE Sequence of event j Page no of PB 30.09.2014 Assessee Company filed its ROI for the impugned year declaring NIL Income. Admitted fact para-1 of the assessment order. 09.11.2011 Search and seizure action has been undertaken by revenue i....
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....f search year for the person covered by 153A and 153C are to be framed by the AO who has assessed the Block period and not by the AO who was regularly assessing the assessee before Centralization of cases. The ld. Counsel for the assessee submitted that in the case of assessee, the assessments of years which were framed after centralization were framed by the AO of Central Circle-1, Faridabad (Copy of orders of AO at Page No 15 of Paper book-2) and the impugned year assessed by the AO Central Circle-1, Gurgaon. Therefore it is abundantly clear that impugned year has not been considered as part of block of 7 years rather assessed as normal year, which is patently wrong, in the light of the provisions of section 153B and 153D. He submitted that in the present case the AO has framed the assessment under section 143(3), which provisions are exclusively meant for regular assessments and not for assessments covered by the provisions of section 153A. He submitted that assessments covered u/s 153A are governed by the time limit provided in 153B since the heading of the section is very clear and unambiguous. He submitted that 153B(1) has two clauses i.e (a) and (b). Perusal of clause (a) wo....
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....ounsel for the assessee accordingly submitted that entire exercise of 263 is bad in law on account of the assessment order being barred by limitation. Referring to the decision of the co-ordinate bench of the Tribunal in the case of NKG Infrastructure Ltd Vs PCIT - ITA No-3825/Del/3827 he submitted that the Tribunal has held that since the original order of assessment is time barred, action of 263 is a nullity. 9.5 The ld. Counsel for the assessee in his next plank of argument submitted that as the impugned year is a search year, as held by the ITAT in assessee's own case, therefore the AO ought to have framed the assessment in the manner provided for assessing search year and one of the most important condition for assessing the year of search is approval of JCIT as per the provisions of section 153D of the Act. He submitted that the AO in the present case has not obtained any approval from the JCIT before passing the order of the assessment of impugned year and hence the entire order was bad in law and hence the order passed u/s 263 was also bad in law. He accordingly submitted that the appeal of the assessee may kindly be allowed on legal grounds itself and the order of PCIT s....
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....,440/-(28.02.2014) Income Assessed u/s 143(3) of the Act 2007-08 45,82,141/- 45,82,141/-(28.02.2014) Income Assessed u/s 143(3) of the Act 2008-09 3,66,359/- 3,66,359/-(28.02.2014) Income Assessed u/s 143(3) of the Act 2009-10 2,65,639/- 2,65,639/-(28.02,2014) Income Assessed u/s 143(3) of the Act 2010-11 37,08,227 37,08,227/-(28.02.2014) Income Assessed u/s 143(3) of the Act 2011-12 11,28,562/- 11,28,562/- {28.02.2014) Income Assessed u/s 143(3) of the Act 2012-13 4,62,24,040/- 43,23,48,069/- (05.02.2014) Assessment was quashed by the ITAT following RRJ Security judgment in ITA No-2550/Del/2015 2013-14 3,10,05,770/- 3,96,37,197/- Matter is subjudice before the ITAT 10.3 He submitted that the assessments would prove beyond doubt, about the identity and credit worthiness of the loan creditor. So far as comments of PCIT on some transactions entered into by Vinod Ambawatta with third parties is concerned, he submitted that those transactions have nothing to do with these proceedings. Further the view of the AO for not making any addition u/s 68 vis-avis credits from Vinod Ambawatta is fortified by the settled position of law that, asse....
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....n the relevant assessment years:- Party name Amount Date when advance is given Page Number of P8-1 Ambawatta Towers 2,61,000/- 16.12.2009-2,500-AY:2010-11 29.09.2010-200000 --AY:2011-12 22.11.2011-5802-AY: 2012-13 160 of PB-1( All these years were assessed u/s 153C read with 143(3) SS Greens Homes Pvt Ltd 8,41,05,000/- First four entries of Pg-161 are of AY 2011-12 and rest of the entries of Pg 161-162 are of AY 2012-13 161-162 of PB-1, all the AY were assessed u/s 143(3) Sunil Kumar 15,00,000/- 14.08.2012- AY 2013-14 Assessment was framed u/s 143(3} of the Act. Tauras Build well 16,54,22,176/- AY2011-12& 2012-13 164-165- Sigma Infracon 52,50,000/- 19.02.2008- 50,00,000- AY 2008-09 11.03.2008- 2,50,000 AY 2008-09 12.1 On the contrary it is an admitted position of fact that in the impugned year assessee has received back the deposits from the concerned parties. The position of closing balance of the impugned year is mentioned at Page Number-6 of the PCIT order. 12.2 He submitted that provisions of deemed dividend are not applicable on assessee, since the assessee has not received any funds in the shape of loan or advances rather give....
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....143(3) and there is not a single document which would show that what assessee has received was his unaccounted money advanced by assessee in previous years and received back in impugned year. Therefore it cannot be alleged that AO has passed the assessment order without looking into the facts properly and his view cannot be termed as erroneous & prejudicial to the interest of revenue. 12.5 He submitted that again on Page Number -6 of the impugned order the PCIT has held that genuineness/ credit worthiness of the amounts received back from the aforesaid parties has not been examined. He submitted that so far as the present year is concerned AO was not empowered to invoke the provisions of section 68 to advances received back during the years. And for previous years the assessments were made after survey and search. Therefore it cannot be said that assessee has been able to conceal the facts from the department. Therefore, the view of the AO cannot be termed as erroneous & prejudicial to the interest of revenue. The ld. Counsel drew the attention of the Bench to the status of previous years assessments of the assessee which are as under:- A.Y Income Declared Income Assessed u/s....
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....e on car loan. This amount is coming from previous year (Page No.195 of PB-1). He submitted that the assessee company has incurred following car loans and the finance cost is attributable to them Amount of Loan Initially Date on which taken Opening balance for impugned year Relevant Page No- Interest paid in present year 54,90,000/- 15.02,2012-(AY 2012-13) 44,45,612.30/- Page No-12-13(Figure at Serial - 14) 4,19,722/- 63,50,000/- 15.02.2020(AY 2012- 13) 51,42,132/- Pg no-15 Figure at Sr Number-14 485714/- 75,00,000/- 01.07.2012(AY-2013- 14) 58,73,595/- Pg No-17- Item number-9 586631/- Total interest paid 14,92,067/- 13.1 Referring to the above, he submitted that assessee has repaid interest on car loan taken from ICICI Bank and similar payments were allowed in previous years when the cases of the assessee were examined in the light of the provisions of search and survey. Therefore the allegation of PCIT is incorrect and he failed to appreciate that assessee has not completely stopped its business activities rather there was a lull in business and the company was in process of finding the correct customer for its real e....
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....ence the jurisdiction of 263 was also barred by limitation. b. On merits the case of the assessee is that the AO has examined each and every aspect of the balance sheets and profit and loss account with documentary evidences and the observation of the PCIT that order is passed without proper enquiries is not tenable since the AO has issued a detailed questionnaire during original proceedings and replies were filed by assessee in respect of those questions. 13.6 The ld. Counsel for the assessee has argued that appeal of the assessee be allowed both on merits and law point 14. The ld. DR, on the other hand, strongly supported the order of the PCIT in exercising his power u/s 263 of the Act and filed the following written submission:- "1. The jurisprudence on the issue of review order under section 263 of the act is discussed as under;- 1. With effect from 01.04.2015, the Legislature increased the ambit of 'erroneous order' passed by the AO to be considered as prejudicial to the interest of Revenue through the insertion of an Explanation to Sub-section (1) of Section 263 as follows: a. the order is passed without making inquiries or verification which should have bee....
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.... the failure to issue notice on any particular issue does not vitiate the exercise of power under Section 263, as long as the assessee is heard and given an opportunity. It has been held by the Hon Court that once such satisfaction (of the order being erroneous and prejudicial to revenue) is reached, jurisdiction to exercise the power under Section 263 would be available with the CIT subject to observance of the principles of natural justice which is implicit in the requirement cast by the Section to give the assessee an opportunity of being heard. It is in the context of the above position that the Apex Court has repeatedly held that unlike the power of reopening an assessment under Section 147 of the Act, the power of revision under Section 263 is not contingent on the giving of a notice to show cause." 14.1 He accordingly submitted that the grounds raised by the assessee be dismissed. 15. We have considered the rival arguments made by both the sides, perused the orders of the PCIT and the Assessing Officer and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find, the ld. PCIT invoking the powers conferred u/s 26....
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....as not issued the mandatory notice u/s 153C and has passed the order u/s 143(3) and has not obtained any approval from the JCIT before passing the order for the impugned assessment year which is the search year as held by the Tribunal in assessee's own case in the immediately preceding years, therefore, the order is bad in law. Once it is held that the original order passed by the AO is without jurisdiction being passed by the wrong AO, barred by limitation being passed after 31.03.2016 and bad in law being passed in contravention to provisions of section 153C and without obtaining prior approval of the JCIT, therefore, the order passed u/s 263 against such assessment order is also bad in law and has to be quashed. We hold and direct accordingly. The additional grounds raised by the assessee are accordingly allowed. 15.2 Even on merits also we find the AO during the course of assessment proceedings has issued the following questionnaire, copy of which is placed at paper book page pages 5 to 7:- 15.3 We find the assessee has given point-wise reply to the various questions put by the AO. We find, the ld.CIT(A) has invoked jurisdiction u/s 263 basically for the following reasons:- ....
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....ils such as confirmations, proof of identity, copy of ITR, bank details, etc. to prove the ingredients of provisions of section 68 in response to the letter of the AO. Under these circumstances, it cannot be said that the AO has not made any enquiries especially when the assessee as well as Mr. Vinod Ambawata were assessed by the same AO. 15.8 We find, the Hon'ble Delhi High Court in the case of CIT vs. D.G. Housing (supra) has held as under:- "The Assessing Officer is both an investigator and an adjudicator. If the Assessing Officer as an ' adjudicator decides a question or aspect and makes a wrong assessment which is unsustainable in law, it can be corrected by the Commissioner in exercise of revisionary power. As an investigator, it is incumbent upon the Assessing Officer to investigate the facts required to be examined and verified to compute the taxable income. If the Assessing Officer fails to conduct the said, investigation, he commits an error and the word "erroneous" includes failure to make the enquiry. In such cases, the order becomes erroneous because enquiry or verification has not been made and not because a wrong order has been passed on merits. 15.9 We fin....
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....ry. The order of the Assessing Officer may be or may not be wrong. CIT cannot direct reconsideration on this ground but only when the order is erroneous. An order of remit cannot be passed by the CIT to ask the Assessing Officer to decide whether the order was erroneous. This is not permissible. An order is not erroneous, unless the CIT hold and records reasons why it is erroneous. An order will not become erroneous because on remit, the Assessing Officer may decide that the order is erroneous. Therefore CIT must after recording reasons hold that the order is erroneous. The jurisdictional precondition stipulated is that the CIT must come to the conclusion that the order is erroneous and is unsustainable in law. We may notice that the material which the CIT can rely includes not only the record as it stands at the time when the order in question-was passed by the Assessing Officer but also the record as it stands at the time of examination by the CIT [see CIT vs. Shree Manjunathesware Packing Products, 231 ITR 53 (SC)]. Nothing bars/prohibits the CIT from collecting and relying upon new/additional material/evidence to show and state that the order of the Assessing Officer is err....